Tag Archives: CARB

With the price of oil continuing on its volatile ride, some fleets are wondering if they should make the switch from good old fashioned diesel fuel to an alternative fuel, or perhaps an electric or hybrid powertrain.

Sure, when diesel was up, the numbers aligned much easier and suddenly alternative fuel technologies began to gain ground. Consider that less than half-a-decade ago, industry pundits were predicting that natural gas would power almost a fourth of all heavy-duty truck fleets today. Then diesel dropped, fueling infrastructure never developed and a greater emphasis zero-emissions trucks took hold. Suddenly compressed natural gas (CNG) never took over and oil is still the main man.

Just as fleets were putting their plans in place to make the transition over to these advanced new fuels, the precipitous drop in the price of oil added a layer of complication into the mix. We all know that diesel prices will rise again, but what they don’t know is when the rise will occur and how much it will hurt.

The New Requirements

The first thing on most carriers’ minds are the upcoming greenhouse gas/fuel economy regulations set to take hold. The final Phase 2 rules are set to cover model years 2021 to 2027 trucks. Trailers regulations kick in a lot sooner, at 2017 to 2027. The requirement will be that new stepped engines reduce their CO2 emissions by 4 percent. The Phase 2 rules will also cover natural gas emissions, the main sources of which on such vehicles being the crankcase and LNG boil-off.

But these changes go beyond a desire to meet regulatory requirements or lower fuel spending. Never underestimate the power of corporate sustainability goals. Sustainable transportation goals gain more ground by the day.

The future holds promise. Imagine natural-gas utilities utilizing their own waste product to power their vehicles. Alternative fuel incentives and stringent regulations further turn up the pressure. But where does price come into place?

Digging into the Price

As always, the best measurement is a head-to-head pricing match up. In this area, CNG is currently around 15 cents higher than its diesel counterpart. But will the price of diesel remain that low over the long term?

Consider that over the past five to ten-year period crude oil prices in around $65 to 75$ per barrel, or around $2.60 to $3.00 per gallon, nationally. Then prices dropped. Still, many industry analysts expect that oil will return to and remain at that level for some time to come.

There are many reasons for this, but the main one is that as wells age, they produce less oil. The only way to justify drilling new wells to sustain global demand is to keep the price at that level. Could oil reach $65 a barrel by the end of this year and into next?

Indeed, some say a medium-term trend could be around $70 a barrel within one- to two-years. Don’t expect the price to travel in a straight line. Right now volatility is the name of the game. But are there examples out there to learn from?

What Can Brown Do?

The fact is, UPS operates one of the largest CNG fleets in the country. With over 7,000 vehicles currently in operation and a plan to build 12 more fueling stations, their lead is one to follow. Considering the company is making a $100 million investment in the project, it isn’t hard to see where they are taking their company as it moves into the future.

What makes this possible is UPS’ ability to fund its own infrastructure with long-term plans in mind. In the end, UPS believes that a commitment to sustainability just makes economic sense. By diversifying its fuel source, UPS makes itself more agile as new greenhouse gas regulations take hold.

But will we see CNG completely take over in the age of cheap oil? Join us in Part II of our series where we answer just that question.

Considering the trucking industry is gearing up for the new greenhouse gas Phase 2 emissions regulations, one would think the California Air Resources Board (CARB) would be taking a hiatus as the Environmental Protection Agency (EPA) gets to work. Except, that isn’t the case.

Their new set of goals aims to explore and expand on zero-emission vehicle technologies. At the time, CARB is not backing this up with any planned laws or regulations, industry experts anticipate that this new look could lead to new environmental mandates on diesel-powered vehicles that could complicate matters where it comes to moving freight in the state.

As Goes California…

California is different from other states in that it has a singular goal of reducing petroleum use, statewide. Pressure comes from the top and filters on down through the state’s agencies, where reducing emissions is concerned.

Just last year, California legislators attempted to pass a bill that would have cut petroleum use in the state by a full half. While that didn’t pass, it led to what we see today, which is an increasing focus on finding realistic ways to develop, field and mass produce zero- or near-zero emissions commercial motor vehicles.

Some may say, “Well, I don’t run in California.” In reality, that doesn’t matter. California is not an island. California has an economic engine that dwarfs that of most countries, let alone states. When CARB passes a rule, it ripples out across the industry.

Some say the changes that may come out of these new initiatives should take into account more than just the vehicle side of the equation. Might California do better to concentrate on modernizing its infrastructure rather than targeting diesel trucks? There are two sides to every argument.

The Other Side

CARB contends that the actions they take to further zero-emission and clean combustion technologies will have benefits that stretch far beyond the bottom line. According to some estimates, California has some of the most polluted cities in the country. The state faces a very challenging problem in figuring out a way to meet federal air quality and emissions standards while not harming its strong economic engine.

So what are CARB’s new guidelines? Specifically, they seek to:

Ensure all federal health-based air quality standards are met. Key milestones are set for 2023 and 2031.

Reduce their greenhouse gas footprint by 40 percent by 2030.

Reduce their greenhouse gas footprint by 80 percent by 2050.

Halve petroleum use in the state by 2030.

Considering the new federal ozone standards are set to a tough level, fleets will have to put in extra effort to meet them. This will require major changes across the industry, whether you are talking about industrial, transportation or manufacturing.

What CARB is essentially doing is attempting to lay the foundation for emissions reductions on multiple levels. From cleaner engine technologies to renewable fuels and zero-emission technology, California aims to end up with reductions that come in 90% cleaner than today’s standards.

Actions CARB is Taking

CARB is moving aggressively to plant the seeds that will grow into these changes. The agency is thinking beyond merely heavy-duty vehicles and is focusing on off-road equipment and more. These actions include steps to deploy zero-emissions technologies across a broad spectrum of equipment types, from busses to forklifts and airport ground support equipment.

Still, these actions go further than just aiming their intent at heavy-duty commercial vehicles. They will also affect other aspects of the freight network. Other measures outlines include a desire to see a quarter percent improvement in freight system efficiency by 2030.

While some say CARB is overreaching, the fact is no rules or regulations have been specifically mandated just yet. At this point, trucking will have to wait and see what the Golden State decides.

It’s no secret that California leads the nation in implementing new regulations. Due to its sheer size, rules written by the Golden State tend to be adopted by other states and even influence federal rulemaking.

This is especially true in the area of environmental and fuel regulatory standards. Currently, California has some of the most stringent rules in place where vehicle emissions are concerned. This is why industry experts across the country are watching what California does with baited breath.

A New Executive Order

Governor Jerry Brown recently signed an executive order directing state agencies to craft an “integrated action plan” by next summer. The mandate requests that agencies set “clear targets to improve freight efficiency, transition to zero-emission technologies and increase competitiveness of California’s freight system.”

Otherwise known as the California Sustainable Freight Strategy, the action plan aims to identify policies, programs and investments that will help California achieve its sustainability targets.

In the end, the final plan will be contributed to by several existing agency strategies. These will include the California Freight Mobility Plan, The Sustainable Freight Pathways, and Zero Emissions Discussion Plans.

A Method to the Madness

It should be a surprise to very few that California ranks as the eighth-largest economy in the world. It’s no wonder then that Governor Brown made his freight views quite clear in his recent announcement. After all, freight efficiency and environmental sustainability are not mutually exclusive principles.

In his statement, Brown noted that the freight transportation system accounts for a full third of the state’s economy and jobs. Considering freight-dependent industries accounted for over $700 billion in revenue in 2013, there may be some merit to his words.

The fact is, significant investments in infrastructure and sustainability are necessary to ensure California remains a competitive state, and Governor Brown knows this. He went on to say that “the policies and investments of state transportation and environmental agencies can influence California’s freight system to become more efficient, competitive, and environmentally sustainable.”

A Pathway to Success

In order to ensure that progress is made towards reaching the goal of a sustainable freight system, Brown ordered state agencies to make progress on instituting “corridor-level freight pilot projects within the state’s primary trade corridors that integrate advanced technologies, alternative fuels, freight and fuel infrastructure, and local economic development opportunities.

This new executive order comes on the heels of one Brown issued in April that aims to ensure California’s greenhouse gas emissions are reduced by 40 percent by 2030. This appears to be one of the most aggressive benchmarks enacted by any government in North America so far to date. According to the Governor’s office, their goal is to reduce emissions by 80 percent by 2050.

As the California Air Resources Board explains it, the Pathways document presents a clear vision of a clean freight system. It also outlines immediate steps that can be undertaken to support zero and near-zero emission technology.

An Industry’s Take

According to Brian Kelly, Secretary of the California State Transportation Agency, “If we want to effectively protect the environment and simultaneously make the movement of goods easier, while expanding economic competitiveness, we must have one integrated freight strategy.”

Yet the industry remains decidedly measured on the topic. The California Trucking Associations’ reaction was quit neutral. According to them, this proclamation “demonstrates the important of California’s freight transportation system to the state’s economy.”

They were quick to caution, however, that “as the state contemplates more costly new emissions targets, it must consider the economic impact to the trucking industry.”

The fact is, California truckers already spend a hefty chunk of change to meet California’s current standards. How new regulations are set to affect trucking remains to be seen.